Uh-oh. Don't look now, but Blue Origin just had another "anomaly" -- and the future for investing in space tourism just got a little bit less certain.
On Monday, Sept. 12, an unmanned New Shepard rocket operated by Blue Origin -- the space tourism venture established by Amazon founder Jeff Bezos -- suffered a booster failure about a minute after launch. The good news is that the rocket's escape capsule operated as designed, boosting away from the rocket core and then parachuting back down to Earth. The bad news is that the rocket proper crashed back to Earth and exploded.
Image source: Blue Origin.
We're responding to an issue this morning at our Launch Site One location in West Texas. This was a payload mission with no astronauts on board. The capsule escape system functioned as designed. More information to come as it is available.
-- Blue Origin (@blueorigin) Sept. 12, 2022
Now, the other good news is that while New Shepard was developed to carry tourists to space and back, this particular New Shepard rocket carried no passengers on board -- only science experiments. Thus, not only was no one hurt in the incident but there was no one there to be hurt.
During today's flight, the capsule escape system successfully separated the capsule from the booster. The booster impacted the ground. There are no reported injuries; all personnel have been accounted for.
-- Blue Origin (@blueorigin) Sept. 12, 2022
But that's not even close to the end of this story.
The great space tourism race
To bring you up to date, right now there are two main players in the space tourism industry: Blue Origin, which is privately owned, and Virgin Galactic (SPCE +2.19%), which is publicly traded. Of the two, both are licensed to carry paying passengers to space, but only Blue Origin actually has carried people who didn't also work for the company.
NYSE: SPCE
Key Data Points
In fact, to date, Blue Origin has now carried six separate groups of space tourists to the edge of space and back -- safely -- while Virgin Galactic is still in the flight-testing stage of its development. Furthermore, Virgin Galactic isn't expected to begin commercial flights with its VSS Unity spaceplane before the second quarter of 2023, and its VSS Imagine spaceplane won't begin commercial flights before the fourth quarter of 2023.
Up until this month, that seemed to make this particular space race kind of a "gimme." Blue Origin was running away with the race, while Virgin Galactic had yet to enter the starting gate. But now (if you'll forgive the mixed metaphor), Blue Origin's "anomaly" has thrown a monkey wrench into the race. Going forward, potential space tourism customers have to decide whether they want to buy tickets from Virgin Galactic, which suffered a crash of its prototype spaceplane during flight testing in 2014 (when it was operated by Scaled Composites), killing one pilot, and suffered an engine failure on a 2020 flight (when it was operated by Virgin Galactic) -- but landed its spaceplane safely regardless -- or buy tickets from Blue Origin, which now has an even more recent failure of its own to contend with.
True, Blue Origin may be able to "spin" this story as a demonstration of the safety of its system. After all, the escape capsule did operate as designed, and it's likely that even if passengers had been aboard, they would have survived. On the other hand, it would have been a harrowing experience and perhaps not something many customers would want to pay $28 million (the only ticket price on Blue Origin's that's yet been confirmed) to enjoy.
An additional wrinkle: Whether or not customers are willing to roll the dice with Blue Origin after this month's anomaly, the government could have a say in that decision. As is standard in such situations, the U.S. Federal Aviation Administration has initiated an investigation into the anomaly, and Blue Origin actually cannot fly passengers to space again until that investigation concludes -- and whatever caused the anomaly is fixed.
The upshot for investors
Depending on how long the FAA investigation runs, Virgin Galactic could use that time to catch up with Blue Origin -- although it would have to be a long investigation for Virgin Galactic to both finish wrapping up its own test flight program and launch a crewed mission before the FAA finishes its work.
Ultimately, I suspect Blue Origin's anomaly will end up being seen as a negative for both Blue Origin and Virgin Galactic. The crashed rocket will accentuate the dangers of space tourism, which could make it difficult for both Blue Origin and Virgin Galactic to sell all the tickets they will need to reach profitability. It will also remind investors of what might happen to their stocks in the event a later crash -- by either company -- results in casualties.
Much as I love the idea of investing in space, and much as I chafe at having to wait for good opportunities to do so, I'm of the opinion that "space tourism" is probably not the best way to do this. At least not right now, and at least not with these companies.
